SBI - Mahurat Picks 2012 - ICICIdirect

(Buying Range: Rs.2210-Rs.2150)

SBI is the market leader (~18% market share) by a wide margin with a gross advances of Rs. 9.45 trillion. It has led the rate cuts and is offering one of the lowest lending rate across the industry. In spite of this, it is maintaining one of the highest NIM at ~3.7%. A strong operational performance led by NII enables SBI to cover up for higher provisioning and post decent profitability

- Although NPAs are expected to remain elevated for couple of quarters and stay between 4% and 5%, it is mainly factored in the price. Considering the large size of SBI, its exposure to stressed sectors is relatively low compared to its peers

- Besides, the economy and investment cycle is near bottom and interest rates are expected to come down. A few reform measures (like fast environmental clearance, land clearance, etc.) may surprise positively. Such a scenario remains positive for high beta stock like SBI to outperform.

Source : Equity Bulls

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